Sequans Communications S.A. (NYSE:SQNS), a 4G chipmaker supplying LTE
and WiMAX chips to equipment manufacturers for mobile operators
worldwide, today announced financial results for the fourth quarter and
full year ended December 31, 2012.

Fourth Quarter 2012 Highlights:

Revenue: Revenue of $3.1 million decreased 60.8% sequentially
from the third quarter of 2012, reflecting a decrease in shipments of
WiMAX products, partially offset by increased LTE shipments. Revenue
decreased 72.8% compared to the fourth quarter of 2011, due to lower
sales of WiMAX products, following changes in the WiMAX market in the
United States beginning in the second half of 2011.

Gross margin: Gross margin was 9.4%, including a provision for
excess inventory totaling $0.9 million. This compares to gross margin of
48.0% in the third quarter of 2012 and 52.0% in the fourth quarter of
2011. Excluding this provision, gross margin in the fourth quarter would
have been 36.6%.

Operating income (loss): Operating loss was $9.8 million compared
to an operating loss of $6.0 million in the third quarter of 2012 and an
operating loss of $5.0 million in the fourth quarter of 2011.

Net loss: Net loss was $9.9 million, or ($0.29) per diluted
share/ADS, compared to a net loss of $5.8 million, or ($0.17) per
diluted share/ADS in the third quarter of 2012 and a net loss of $5.6
million, or ($0.16)per diluted share/ADS in the fourth quarter
of 2011.

Non-IFRS Net loss: Excluding stock-based compensation, non-IFRS
net loss was $9.7 million, or ($0.28) per diluted share/ADS, compared to
a non-IFRS net loss of $5.0 million, or ($0.15) per diluted share/ADS in
the third quarter of 2012, and a non-IFRS net loss of $4.3 million, or
($0.12) per diluted share/ADS, in the fourth quarter of 2011.

Key Metrics

In millions of US$ except percentages, shares and per share amounts

Q4 2012

%*

Q3 2012

%*

Q4 2011

%*

Full year 2012

%*

Full year 2011

%*

Revenue

$3.1

$8.0

$11.5

$22.3

$93.7

Gross profit

0.3

9.4%

3.8

48.0%

6.0

52.0%

10.3

46.3%

47.3

50.5%

Operating income (loss)

(9.8)

-314.2%

(6.0)

-74.7%

(5.0)

-43.4%

(32.8)

-147.2%

1.1

1.1%

Net profit (loss)

(9.9)

-316.7%

(5.8)

-72.2%

(5.6)

-48.9%

(33.0)

-148.4%

(0.4)

-0.5%

Diluted EPS

($0.29)

($0.17)

($0.16)

($0.95)

($0.01)

Number of diluted shares/ADS

34,683,839

34,683,839

34,626,501

34,680,227

32,610,680

Cash flow from (used in) operations

(6.8)

(3.3)

(3.1)

(22.9)

2.8

Cash and cash equivalents at quarter-end

28.8

36.4

57.2

28.8

57.2

Additional information:

Stock-based compensation included in operating result

0.2

0.7

1.3

3.2

4.2

Non-IFRS diluted EPS (excludes stock-based compensation)

($0.28)

($0.15)

($0.12)

($0.86)

$0.11

* Percentage of revenue

Full Year 2012 Highlights:

Revenue of $22.3 million in 2012 decreased 76.3% from 2011; gross margin
declined to 46.3% in 2012 compared to 50.5% in 2011, primarily due to
lower absorption of fixed costs resulting from decreased revenue.

Operating loss was $32.8 million in 2012 compared to operating income of
$1.1 million in 2011, while the net loss was $33.0 million ($0.95 loss
per diluted share/ADS) in 2012 compared to a net loss of $0.4 million
($0.01 loss per diluted share/ADS) in 2011. Excluding stock-based
compensation, non-IFRS net loss was $29.8 million, or $(0.86) per
diluted share/ADS in 2012, compared to a non-IFRS net profit of $3.7
million, or $0.11 per diluted share/ADS in 2011.

“Developments during the fourth quarter support our expectation that our
LTE revenue will ramp in the second half of 2013,” said Georges Karam,
Sequans CEO. “We completed Verizon’s certification process for our
high-performance StreamrichLTE product, and we are working with several
OEMs to serve the Verizon market opportunity. We won a significant
portion of China Mobile’s first bid for expanded LTE field trials in
China, and additional bids are expected to follow during this year. Our
products performed well in field tests in India, where Reliance Infocomm
is expected to launch commercial service in the second half of 2013, and
we continue to engage with more operators including Softbank in Japan
where we completed a successful trial of our LTE interference
cancellation technology. Also, WiMAX operators planning a near-term
transition to LTE have been testing our dual-mode WiMAX/LTE solution.
We expect WiMAX revenue to continue, although at a low level,
primarily in emerging markets where existing networks support the
operators’ business case, with the potential to migrate to LTE in
the future, leveraging our dual mode technology.

“We continue to expand the number of LTE projects with existing
customers, we are adding new customers and we are seeing growing
traction for LTE-only devices coming from Tier 1 operators in the U.S.,
Asia and Europe. This reinforces our decision to focus on maintaining
our leadership in 4G and increases our confidence that, once LTE
revenues begin to accelerate in the second half of 2013, we will be able
to sustain our momentum,” concluded Mr. Karam.

Outlook

The following statements are based on management’s current
assumptions and expectations.These statements are
forward-looking and actual results may differ materially.Sequans
undertakes no obligation to update these statements.

Sequans expects revenue for the first quarter of 2013 to be in the range
of $2.5 to $3.5 million, with non-IFRS gross margin around 48%. Based on
this revenue range and expected gross margin, non-IFRS net loss per
diluted share/ADS is expected to be between ($0.23) and ($0.25) for the
first quarter of 2013, based on approximately 34.7 million weighted
average number of diluted shares/ADSs. Non-IFRS EPS guidance excludes
primarily the impact of stock based compensation.

Conference Call and Webcast

Sequans plans to conduct a teleconference and live webcast to discuss
the financial results for the fourth quarter and full year 2012 today,
February 7, 2013 at 8:00 a.m. EST/14:00 CET. To participate in the live
call, analysts and investors should dial 800-230-1059 (or +1
612-234-9959 if outside the U.S.). A live and archived webcast of the
call will be available from the Investors section of the Sequans website
at www.sequans.com/investors/.
A replay of the conference call will be available until March 7, 2013,
by dialing toll free 800-475-6701 in the U.S., or +1 320-365-3844 from
outside the U.S., using the following access code: 276747.

Forward-Looking Statements

This press release may contain projections or other forward-looking
statements regarding future events or our future financial performance.
All statements other than present and historical facts and conditions
contained in this release, including any statements regarding our future
results of operations and financial positions, business strategy, plans
and our objectives for future operations, are forward-looking statements
(within the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended). These
statements are only predictions and reflect our current beliefs and
expectations with respect to future events and are based on assumptions
and subject to risk and uncertainties and subject to change at any time.
We operate in a very competitive and rapidly changing environment. New
risks emerge from time to time. Given these risks and uncertainties, you
should not place undue reliance on these forward-looking statements.
Actual events or results may differ materially from those contained in
the projections or forward-looking statements. Some of the factors that
could cause actual results to differ materially from the forward-looking
statements contained herein include, without limitation: (i) the
contraction or lack of growth of markets in which we compete and in
which our products are sold, including WiMAX and LTE markets, (ii)
unexpected increases in our expenses, including manufacturing expenses,
(iii) our inability to adjust spending quickly enough to offset any
unexpected revenue shortfall, (iv) delays or cancellations in spending
by our customers, (v) unexpected average selling price reductions, (vi)
the significant fluctuation to which our quarterly revenue and operating
results are subject due to cyclicality in the wireless communications
industry and transitions to new process technologies, (vii) our
inability to anticipate the future market demands and future needs of
our customers, (viii) our inability to achieve new design wins or for
design wins to result in shipments of our products at levels and in the
timeframes we currently expect, and (ix) other factors detailed in
documents we file from time to time with the Securities and Exchange
Commission. Forward-looking statements in this release are made pursuant
to the safe harbor provisions contained in the Private Securities
Litigation Reform Act of 1995.

Use of Non-IFRS/non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements prepared
in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP,
financial measures. These measures exclude non-cash charges relating to
stock-based compensation. We believe that these measures can be useful
to facilitate comparisons among different companies. These non-GAAP
measures have limitations in that the non-GAAP measures we use may not
be directly comparable to those reported by other companies. We seek to
compensate for this limitation by providing a reconciliation of the
non-GAAP financial measures to the most directly comparable IFRS
measures in the table attached to this press release.

About Sequans Communications

Sequans Communications is a 4G chipmaker, supplying LTE and WiMAX chips
to equipment manufacturers for mobile operators worldwide. Founded in
2003 to address the WiMAX market, the company expanded in early 2009 to
address the LTE market. Sequans chips are inside 4G networks around the
world. Sequans is based in Paris, France with additional offices
throughout the world, including United States, United Kingdom, Israel,
Hong Kong, Singapore, Taiwan, South Korea and China. www.sequans.com

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